Correlation Between Vital Farms and Laird Superfood

Can any of the company-specific risk be diversified away by investing in both Vital Farms and Laird Superfood at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Vital Farms and Laird Superfood into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vital Farms and Laird Superfood, you can compare the effects of market volatilities on Vital Farms and Laird Superfood and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Vital Farms with a short position of Laird Superfood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vital Farms and Laird Superfood.

Diversification Opportunities for Vital Farms and Laird Superfood

0.63

Correlation Coefficient

Vital Farms  Laird Superfood

Poor diversification

The 3 months correlation between Vital and Laird is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vital Farms and Laird Superfood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laird Superfood and Vital Farms is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Vital Farms are associated (or correlated) with Laird Superfood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laird Superfood has no effect on the direction of Vital Farms i.e., Vital Farms and Laird Superfood go up and down completely randomly.

Pair Corralation between Vital Farms and Laird Superfood

Given the investment horizon of 90 days Vital Farms is expected to under-perform the Laird Superfood. But the stock apears to be less risky and, when comparing its historical volatility, Vital Farms is 1.49 times less risky than Laird Superfood. The stock trades about -0.11 of its potential returns per unit of risk. The Laird Superfood is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  752.00  in Laird Superfood on January 29, 2025 and sell it today you would lose (185.00) from holding Laird Superfood or give up 24.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Vital Farms  vs.  Laird Superfood

Vital Farms

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vital Farms has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Laird Superfood

Risk-Adjusted Performance

Very Weak

Over the last 90 days Laird Superfood has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Vital Farms and Laird Superfood

The main advantage of trading using opposite Vital Farms and Laird Superfood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vital Farms position performs unexpectedly, Laird Superfood can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Laird Superfood will offset losses from the drop in Laird Superfood's long position.

The idea behind Vital Farms and Laird Superfood pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.